Industry & Economy
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Taxation
Proposal to tax gifts may not include loans
K.R. Srivats
New Delhi
,
July 12
INDIVIDUALS and Hindu undivided family (HUFs) may have cause for cheer, with a Finance Ministry official clarifying that loans are "not intended" to be covered in the clause in the Finance Bill 2004 that seeks to tax purported gifts from unrelated persons as income.
"Even though the clause has been so drafted to include every deemed capital receipt, beyond the threshold limit, as income, loans are not intended to be covered under this section", a senior Finance Ministry official said.
The Finance Minister, Mr P. Chidambaram, had in his Budget speech said that purported gifts from unrelated persons, above the threshold limit of Rs 25,000, would now be taxed as income. He, however, held that gifts received from blood relations, lineal ascendants and lineal descendents, and gifts received on certain occasions such as marriage will continue to be totally exempt.
This proposal, Mr Chidambaram held, is aimed at preventing money laundering.
Soon after the Budget was presented, the HUFs and individuals were keen to know as to whether loan transactions are covered in the Budget proposal that seeks to tax purported gifts from unrelated persons as income. "Doubts are bound to arise as the clause is worded - any sum received by an individual or a HUF. Any sum may also include loans. There has to be clarity", an industry official said.
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